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Purposeful Innovation and the Seven Sources

for Innovative Opportunity

Entrepreneurs innovate. Innovation is the specific instrument of
entrepreneurship. It is the act that endows resources with a new
capacity to create wealth. Innovation, indeed, creates a resource.
There is no such thing as a “resource” until man finds a use for some-
thing in nature and thus endows it with economic value. Until then,
every plant is a weed and every mineral just another rock. Not much
more than a century ago, neither mineral oil seeping out of the ground
nor bauxite, the ore of aluminum, were resources. They were nui-
sances; both render the soil infertile. The penicillin mold was a pest,
not a resource. Bacteriologists went to great lengths to protect their
bacterial cultures against contamination by it. Then in the 1920s, a
London doctor, Alexander Fleming, realized that this “pest” was
exactly the bacterial killer bacteriologists had been looking for—and
the penicillin mold became a valuable resource.
The same holds just as true in the social and economic spheres.
There is no greater resource in an economy than “purchasing
power.” But purchasing power is the creation of the innovating
entrepreneur.
The American farmer had virtually no purchasing power in the
early nineteenth century; he therefore could not buy farm machinery.
There were dozens of harvesting machines on the market, but how-
ever much he might have wanted them, the farmer could not pay for
them. Then one of the many harvesting-machine inventors, Cyrus
McCormick, invented installment buying. This enabled the farmer to
pay for a harvesting machine out of his future earnings rather than out
of past savings—and suddenly the farmer had “purchasing power” to
buy farm equipment.
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